Summary of MOBILE INTEGRATED SYSTEMS, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OFOPERATIONS

Forward Looking Statements

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. Some of the statements contained in this Report that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company intends to issue "penny stock," as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

· Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;
· Our ability to raise capital when needed and on acceptable terms and conditions;

· The intensity of competition;
· General economic conditions; and

· Changes in government regulations.

The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

Unless otherwise provided in this Report, references to the "Company," the "Registrant," the "Issuer," "we," "us," and "our" refer to Mobile Integrated Systems, Inc.

Critical Accounting Policies and Estimates

The Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different conditions.

Plan of Operation

We are a development stage company and now also a deployment stage company. We are developing a patent-pending software application which permits the secure purchase of lottery tickets on commercially available "smart" phones and similar mobile telecommunications devices. A smart phone is a mobile phone offering advanced capabilities, often with personal computer-like functionality, such as e-mail, Internet access and other applications. Our proprietary technology for facilitating the purchase of lottery tickets through commercially available smart phones and other mobile devices addresses all elements of lottery play, including secure player registration and authorization, number selection, settlement, winning number notification and other direct-to-customer marketing opportunities. We intend to license our software application to governments and other lottery operators as our primary source of revenue. We do not intend to become a lottery operator. During the foreseeable future, we expect to pursue our business outside of the United States. Our business plan calls for launching our mobile lottery application in the target markets of the Caribbean, Canada, Mexico, South America, Asia (China, Vietnam), Africa, Europe (Turkey and the United Kingdom of Great Britain) and the Eastern bloc region.

We have advanced our working demonstrations of our lottery and sports betting application (which is currently operable on most Blackberry smart phones including the Pearl, the Curve, the Bold, and 8800 series and soon IOS or apple platforms such as IPhones and IPads), as well as a scratch card game that is operating on Android devices. Our current lottery software solution includes four of the six components that together will constitute our full mobile lottery application. The completed components include lottery game selection, lottery number picking, lottery number authorization, lottery player registration and some aspects of player messaging functions. The two components remaining to be developed for a complete system include financial settlement and some remaining player messaging functions. We believe our application is commercially viable and will provide a complete, fully functional and flexible mobile lottery platform for lottery operators worldwide.

As of the date of this Report, our mobile lottery software application has now been completed according to our stage 1 targets. It has been internally tested and reviewed is ready for commercial deployment for SMS and limited smart phone customers. It has not yet been commercially tested or utilized by any lottery operators and we have not yet generated any revenues from our technology. We anticipate our current in progress deployment in Haiti will generate revenues in 2012.

Assets and Liabilities

As of February 29, 2012, the Company had total assets of $73,815, including total current assets of $65,972. This represented a decline from May 31, 2011, at which time the Company's total assets were $288,746, including total current assets of $274,846. We have prepaid rent in the amount of $10,836 as a condition of renting business premises, which commenced on March 11, 2011 at Suite 502, 25 Adelaide Street in Toronto, Ontario. We also own fixed assets with a cost of $31,060 which consists of computer equipment, office furniture and equipment and leasehold improvements. The decrease in assets is predominately a result of using cash to fund expenses in the course of normal operations.

The Company's total liabilities increased from $675,885 at May 31, 2011 to $844,372 at February 29, 2012. This increase is the result of regular accruals made in the ordinary course of operations and a promissory note in the amount of $200,000 issued by the Company (this note, with accrued interest, now represents a liability of $204,219). Accrued liabilities at February 29, 2012 totalled $174,929, which was a decrease from $226,836 at May 31, 2011, and included the following: Payments due for programming and system testing and consulting of $128,297, accrued legal expenses of $31,104, accrued audit fees of $14,900. Standby loans and interest totalled $463,032 at February 29, 2012, which was an increase from $448,737 at May 31, 2011.

Liquidity and Capital Resources

As of February 29, 2012, the Company had $26,120 in cash, which was a decrease from $153,162 at May 31, 2011. As a development stage company, we have limited capital and limited operating resources. We do not have sufficient funds to pay our current accrued liabilities and the current cash on hand in our bank accounts is not sufficient to maintain our operations.

Through February 29, 2012, we have raised $2,282,457 via private placements of common stock, and $660,020 via loan agreements. The funds raised in the prior private placements will not be sufficient to meet our projected cash flow deficits from operations or to fund the development of our technology and products. Therefore we anticipate further capital raises will be required to bring the company to revenues.

The cash on hand in our bank accounts is not sufficient to maintain our operations. We estimate our total overhead, costs and expenses related to completion of a commercially deployable version of our mobile lottery application, obtaining certification of our system by the Gaming Standards Association (GSA), and initiating full rollout of our products to our target markets over the next twelve months will be approximately $1,200,000. We will need additional amounts of funding in order to expand our operations.

Management believes that without obtaining additional financing or developing an ongoing source of revenue, we will not launch successfully. Although we have actively been pursuing new business opportunities, we cannot give assurance that we will succeed in this endeavor, or be able to enter into necessary agreements to pursue our business on terms favorable to us. Should we be unable to generate additional revenues or raise additional capital, we could eventually be forced to cease business activities altogether.

Results of Operations for the Three and Nine Months Ended February 29, 2012 and February 29, 2012

Income

We are a development stage company and now also a deployment stage company. For the three months ending February 29, 2012 the Company had revenue of $33,900. This revenue represented a progress payment against the development of a mobile application for the Princess Margaret Hospital Foundation Home Lottery. This contract was a development fee contract and represents the Company's first successful development and deployment of its technology capabilities. The Company believes that this project demonstrates the marketability of the Company's core lottery offering. Furthermore, the Company believes it has also opened up a new market opportunity in the Fundraising/Foundation market place.
We will continue to concentrate our efforts on developing our business strategy and obtaining financing. We have working models ready for demonstration and we have commenced our initial sales and marketing program. We also now have identifiable opportunities and are working closely with partners in Venezuela and Haiti, as well as with some lottery operators in Canada. In addition, we are actively pursuing other opportunities elsewhere. Our core mobile lottery software application has not yet been utilized by any lottery operators and we have derived limited revenues from our technology. Based on the progress we have achieved to date we anticipate revenue to increase as we move into 2012. There is no guarantee that we will be able to successfully develop and launch any of these current projects or that it will generate sufficient revenue to sustain our operations.

The Company has also now partnered with Quantitative Alpha Trading Inc. (QAT), a proprietary development company with a leading edge trading platform, to "mobilize" its core product. The product will be a mobile application displaying QAT's proprietary market sentiment indicator. The Company is currently in beta testing on this product and is excited about the new opportunity that this product offers. The Company intends to execute a Licensing agreement and sell this product on a monthly fee basis and anticipates having a product available in the market by the end of the August 31, 2012. Although there is no guarantee that this product will gain market acceptance and earn revenue, the Company believes that it is in the unique position to be able to offer an advanced proprietary product not currently available in the market.

Expenses

During the three months ended February 29, 2012, we incurred $209,738 in total operating expenses. This was an increase from the three month period ended February 29, 2011 during which we incurred expenses of $117,658 in total operating expenses. Since the Company's inception on September 16, 2008, expenses have totaled $4,095,774.

During the nine months ended February 29, 2012, we incurred $1,674,875 in total expenses. These expenses included operating expenses of $606,708 and stock compensation expenses of $1,068,167. This was an increase from the nine month period ended February 29, 2011, during which we incurred $814,748 in total operating expenses.

Systems development expenses of $77,985 for the three months ended February 29, 2012 were incurred for the creation and scoring of the Company's development request for proposal which was issued in late August of 2011, and on-going refinement of the Statement of Work and contract. Systems development expenses of $74,936 for the three months ended February 29, 2011 were incurred for the creation, modification, and maintenance of game demonstrations as well as furtherance of defining the carrier-grade product.

During the three months ended February 29, 2012, salaries expense was $42,357 compared to $97,263 for the three months ended February 29, 2011. The Company has reduced the salaries of full time staff and has allocated staff expense to systems development expense.

During the three months ended February 29, 2012, rent and office expenses of $16,917 were incurred for the head office of the Company. During the three months ended February 29, 2011 rent and office expenses were $19,407.

Legal and accounting fees of $53,624 were incurred for the three months ended February 29, 2012, for the creation of all required public company filings, financial statements and internal corporate needs. This was an increase from the three months ended February 29, 2011, in which legal and accounting fees of $18,612 were incurred.

Director, Officer and Liability Insurance expenses of $8,052 were incurred for the three months ended February 29, 2012.

Marketing expenses for the three months ended February 29, 2012 were $5,951. Marketing expenses of $1,563 for the three months ended February 29, 2011were incurred in the creation and printing of investor information, product information, specific lottery operator presentations and RFP's.

Interest expense accrued on the Standby Loan(s) was $7,258 for the three months ended February 29, 2012.

Our Plan of Operation for the Next Twelve Months

Our path to revenue is based upon completing the following work plan over the next twelve months:

1. Changing the name of the Company to Mobile Integrated Systems Inc. to represent the Company's expanded focus on developing and deploying mobile applications around its core technology platform.

2. Partner with Quantitative Alpha Trading Inc. to offer a mobile offering of the Company's proprietary market sentiment indicator.

3. Completion of the patent and trademark registrations.

4. Adherence to our Marketing Plan (see section below).

5. Completion of the systems development to ensure we have a robust product and all the required modules for end-to-end lottery play (including player registration, numbers selection, authorization, settlement, and player communication / marketing).

6. As opportunities arise, partner with existing suppliers of games to lottery operators in order to mobilize existing lottery games.

7. Remain flexible in our business model to operate as a lottery retailer/distributor, license the technology for use, or sell the technology for use in a pre-defined jurisdiction, preferably in that order, as conditions deem appropriate.

8. Complete appropriate certifications in promising jurisdictions to become a lottery retailer/distributor and/or supplier to specific lottery operators.

9. Partner with the emerging internet gaming suppliers and new lottery licensees to mobilize their offerings.

10. Proactively communicate and present our product and brand to prospective lottery operators, and understand their needs for new sources of revenue.

Marketing Plan

Our marketing plan is a combination of branding, lottery association participation, communication, presentations, and meetings with lottery operators, public messaging, and partnership initiatives with other corporate entities. Specifically, our plan calls for:

1. Changing the name of the Company to Mobile Integrated Systems Inc. to represent the Company's expanded focus on developing and deploying mobile applications around in core technology platform

2. Attending and participating in lottery association events / tradeshows in order to meet prospective clients, speak about mobile lottery opportunities, and present the Company's Mobilotto brand. These would include the World Lottery Association as well as the North American Association of State & Provincial Lotteries, among others.

3. Review each geographical region to justify the development of a mobile gaming environment. Prioritization would be given to those countries with a combination of material lottery revenues, a high penetration of smart phone devices, favorable internet gaming regulations, and operators who express an interest in our product and service.

4. On a prioritized country basis, study the local lottery regulations, understand global and specific country lottery issues, and contact the lottery operators for visitation and demonstration of the Company's products. Currently, opportunities appear to be strong in Canada, Africa, Mexico, Asia, and Europe. Also, the U.S. may become a market for the Company should existing restrictions on internet lottery be changed, or the Company's geo-locational restrictions be confirmed.

5. While brand and product marketing will be supported by the lottery operators and by the mobile network operators, we intend on pursuing additional local marketing efforts including mass awareness campaigns, cause support, and seeking specific customer input.

6. Develop relationships with existing internet gaming companies to "mobilize" their product offerings.

7. Once the Company's product is developed and contracts in place, generate incremental sales through direct to customer marketing through their mobile devices.

Working Capital

While we do not have in-place working capital to fund normal business activities, we are negotiating private financing in the amount of $1,000,000.

Contractual Obligations and Other Commercial Commitments

The sole on-going commitment we have is for the rental of our head office, which runs to the end of November 2013 at a rate that approximates $6,100 per month.

Warrants

As of February 29, 2012, the Company had issued warrants to purchase 396,036 shares of the Company's common stock, at an exercise price of $1.00 per share.

Common Stock

As of February 29, 2012, there were 32,712,626 shares of the Company's common stock issued and outstanding. Following the cancellation of 2,100,000 shares, the Company's five for one stock split, and the issuance of 670,000 shares in April pursuant to securities purchase agreements, there are now 153,733,130 shares of the Company's common stock issued and outstanding.

Employees

We currently have 5 full-time employees who are dedicated to the primary functions of proprietary technology, sales and marketing to lottery operators, development of existing and next generation games for mobile application, and corporate administration. These include our Chief Executive Officer, our President, CFO and CTO, our Director of Development, our Development Analyst, and our Director of Human Resources and Administration.

We expect to hire additional full time employees in the coming year as necessities dictate.

We have engaged consultants for accounting, legal, and other part-time and occasional services.

Officer and Director Transitions

Effective as of February 1, 2012: (i) Mr. Emlyn David has been appointed as the Chief Executive Officer of the Company and as a Member of the Company's Board of Directors (the "Board"); (ii) Mr. Rich Schaeffer has been appointed as a Member and as Co-Chairman of the Board; (iii) Mr. Todd Halpern, a Member of the Board, has been appointed as Co-Chairman of the Board; (iv) Mr. James McGovern has been appointed as a Member of the Board; (v) Mr. Fulvio Ciano has resigned as the Chief Executive Officer of the Company; and (vi) Mr. Donald Ziraldo has resigned as the Chairman of the Board.

Effective as of February 14, 2012, Mr. Benjamin Chesir has been appointed as a Member of the Board.

Amendment to the Company's By-Laws

Effective as of February 1, 2012, the Board approved the following amendment to the Company's By-Laws, to increase the maximum authorized number of members of the Board from seven (7) to ten (10). Article III, Section 3.2 of the Company's By-Laws was deleted in its entirety and replaced with the following:

Section 3.2 Number, Tenure, and Qualifications. The Board of Directors of the Corporation shall consist of at least one (1) individual(s) and not more than ten (10) individuals. The number of directors within the foregoing fixed minimum and maximum may be established and changed from time to time by resolution adopted by the Board of Directors of the Corporation without amendment to these Bylaws or the Articles of Incorporation. Each director shall hold office until his or her successor shall be elected or appointed and qualified or until his or her earlier death, retirement, disqualification, resignation or removal. No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his or her term of office. No provision of this Section shall be restrictive upon the right of the Board of Directors to fill vacancies or upon the right of the stockholders to remove directors as is hereinafter provided.

Subsequent Events

Cancellation of 2,100,000 shares

On March 7, 2012, a shareholder of the Company tendered for cancellation 2,100,000 shares of the Company's common stock, pursuant to an agreement with the Company. The Company did not receive any payment for the cancellation of such shares.

Amendment to the Company's Articles of Incorporation

Effective as of March 26, 2012, the Company's Articles of Incorporation were amended as follows:

1. Article 1 of the Company's Articles of Incorporation was amended to read: "Name of Corporation: Mobile Integrated Systems, Inc." (this action is referred to herein as the "Name Change"). The Company changed its name as part of an effort to re-brand the Company.

2. Article 3 of the Company's Articles of Incorporation was amended by (i) increasing the Company's authorized shares from One Hundred Million Shares (100,000,000) to Three Hundred Million Shares (300,000,000), all of which shares will be common stock, with a par value of $.0001 per share (this action is referred to herein as the "Increase in Authorized Shares,") and (ii) effecting a five for one forward stock split of the Company's issued and outstanding shares (this action is referred to herein as the "Stock Split" and together with the Increase in Authorized Shares and the Name Change, as the "Amendments"). The Company increased its number of authorized shares in order to facilitate the Company's Stock Split. The Company declared a forward stock split of our Common Stock so that each outstanding share of our Common Stock before the Stock Split now represents five
(5) shares after the Stock Split. The Company's Board of Directors believed that the Company's stockholders will benefit from greater liquidity in the Company's Common Stock. On the effective date of the Stock Split, each one share of our Common Stock issued and outstanding immediately prior to the Stock Split was converted into five shares of our Common Stock.

On February 14, 2012, the Board of Directors of the Company approved and recommended the Amendments. Stockholders holding a majority of the voting rights of all outstanding shares of capital stock then voted in favor of the foregoing proposals by written consent.

Securities Purchase Agreements

On April 9, 2012, the Company sold 670,000 shares of the Company's common stock to three purchasers (the "Purchasers") for a purchase price of $.15 per share. In addition, each of the Purchasers has received Warrants to purchase such number of shares of the Company's common stock equal to the number of shares purchased by such shareholder, at an exercise price of $.20 per share. The Company shall pay finder's fee in connection with these sales of the Company's securities, consisting of (i) $8,040; and (ii) Warrants to purchase 53,600 shares of the Company's common stock at an exercise price of $.20 per share.

These sales were made in reliance upon the exemption from Securities Act registration provided by Section 4(2) of the U.S. Securities Act, and the rules and regulations promulgated thereunder, including Rule 903 of Regulation S. The Purchasers are not a U.S. person (as such term is defined in Rule 902(k) of Regulation S).

Off-Balance Sheet Arrangements

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.